To a first time property buyer, one could be confused and worried about the process to obtain a mortgage loan after confirming a property. We understand that the process could be complicated and confusing to many. Therefore, in this article we will highlight the steps involved.
- Placement of Booking
- Purchaser normally place a booking through a real estate negotiator/owner (subsale-readily completed property) or developer (under-construction property) after a few viewing and satisfied with the property chosen.
- Normally a booking form/sales form will be issued upon confirmation and agreement by both buying and selling parties on price, terms and conditions.
- Typically a booking fee will be needed from Purchaser at this stage. (normally 2%-3% for subsale and as determined by developer for under-construction property)
- Application of Mortgage Loan
- Purchasers will normally have 14 – 21 days to source and secure for mortgage loan prior to confirmation on the purchase.
- Purchasers can do this through mortgage advisor or bank. Application can be done concurrently through several banks or financial institution. No cost involved for application according to the industry practice at this moment.
- Acceptance of Letter of Offer
- A Letter of Offer (LO) will be issued by financial institute if purchasers meet the borrowing criteria of their institution.
- Purchaser has the option to compare and understand the differences between different terms and conditions offered by different financial institution.
- Purchaser will then acknowledge the acceptance of the offer by signing the LO. A copy will be given to Purchaser for safekeeping.
- Sales & Purchase Agreement
- Purchaser could then proceed to sign the Sales & Purchase Agreement which confirm the purchase of the property.
- During this time, the purchaser will need to pay the balance down payment which sum up to 10% of the purchase price (the booking fee paid earlier should be considered as part of the down payment)
- This will be done at appointed Legal Firm. Purchaser will be required to pay the legal fees involved and stamp duty (or Memorandum of Transfer-MOT) during the signing. It could sum to 2.5% or higher of the purchase price. (The sum mentioned is merely for reference as it differ from case to case).
- Loan Agreement
- This is a separate agreement from Sales & Purchase as this is an agreement between Purchaser and Financial Institution for the loan granted for the property.
- This could sometime be done together with SPA if the same legal firm appointed and time allowed.
- During the signing too, purchaser will be required to pay the legal fees and stamp duty for this agreement. This would also sum up to around 2.5% of the loan amount. (Again this is merely for reference only)
- Own Your Property
- Purchaser will normally be informed by Legal Firm when all the processes completed and the property is ready to be handed over to purchaser.
- Another indication that a purchaser is about to take possession of the property will be the notice from financial institution with regards to full disbursement of loan and start of monthly instalment.
The flow discussed here is the simplified process without in depth discussion on matters that could arise throughout the process. Details in each process will be discussed in near future.
Feel free to contact us at email@example.com for further clarifications or mortgage loan application.